August 13, 2009

Color me still skeptical. Jeff Nolan has a thoughtful post on the competitors in the electronic book market. Kindle and its like have definitely broken into the early adopter market, but I'm still cautious. Recall the kerfuffle around Amazon's pullback of 1984 copies, and then contemplate what's going to happen when some of those competitors go belly up or otherwise withdraw from the market. People aren't used to having their books disappear, and the combination of hair-brained DRM schemes and obsolescence is not going to be a pretty one. An open format is going to be necessary for this market to go truly mainstream. Jeff's discussion of Sony's fading fortunes in eReaders drew the following comment:

"Sony's ineptitude at digital services is truly mind boggling. Their never-ending quest to dominate with proprietary technology is a remarkable anti-pattern that is worthy of a business textbook: Beta, MiniDisk, UMD, MemoryStick, ATRAC, and 1001 sony cables, plugs, adapters, etc. "

Sad, but true. I bought my Sony alpha DSLR because it could use all my old Minolta glass, but I knew darn well there would be a proprietary battery and at least one proprietary cable in the package. I was not disappointed. Why can't they quit trying to lock customers in, and just go back to making exceptional products? And so a once-great brand decays.

Update: Verrry interesting. The next time I looked at my RSS reader after posting, this pops up. Is Sony getting a clue, or is this just a last ditch effort to save a failing product line?

Michigan hits bottom, keeps digging. One of my former residences is in long term decline, and has the highest unemployment in the nation. It's not enough that union domination and Federal interference in local automative and related industries systematically discourages investment. Now the state is proposing the country's highest minimum wage, mandating company paid health care, and forcing utilities to cut rates 20%. This isn't some fringe notion, it's the head of the state's Democrat party. That'll sure encourage small business and startup ventures to fill the gap left by the industrial sector, you betcha! And I'm watching for the proposal that'll mandate 20% reduced costs for service providers; what about margins don't these idiots understand? Even if this stupidity doesn't pass, the fact that it's seriously considered speaks volumes about the state's continuing cluelessness, and will and should discourage capital formation there. Picking up 100 politically allocated Government Motors jobs building parts for a model that may be DOA due to price and performance isn't going to fix this kind of damage.

Meanwhile, back in Sacramento. Could there be signs of sanity? Supposedly a state financial commission chartered by the Governator is going to recommend a flat tax alternative to the state's current highly 'progressive' income tax. Someone has finally noticed that taking half the taxes from 144,000 of the 38 million residents leads to highly cyclical revenue, and encourages those targets to move elsewhere. Who knew? Mind you, I've full confidence that our politically correct, economically ignorant legislature is capable of ignoring any such troglodyte recommendations.

Business is booming! If, that is, you want a gig packing townhalls and other public venues in favor of ObamaCare. One of the best sources of market and competitive intelligence has always been employment ads, they're a 'data exhaust' that's impossible to hide. And so with leftist astroturf, as some sleuths datamine craigslist to find out where those people are coming from, and who's paying for them. Meanwhile, Cobb profiles these would-be American apparatchiki. Update: Even the MSM is taking notice.

August 10, 2009

So now Carol Bartz, Yahoo CEO, says "we didn't care about search anyway". That may be retrospective sour grapes, but the truth is that Yahoo has acted as if search was not strategic, all the way back to 2000 when it effectively outsourced it to the then-small Google. Meanwhile, content-head CEO Terry Semel put out the word that Yahoo was to become a media company. The wisdom of those decisions is now obvious, but they are a done deal, and trying to evade the outcome has taken Yahoo nowhere. I've written here before suggesting that the company had better find a new positioning taking the reality into account.

So what's the new position? To, err, be a media company, it seems. From the NYT article:

"Its Sports section..., has reporters producing top-notch original material ranging from scoopy news items and blogs to long-form analysis pieces.... According to Ms. Bartz, the majority of Yahoo’s sites will go the way of Sports. In particular, Yahoo will throw investments behind its entertainment, finance and news operations. Ms. Bartz noted that there are plenty of unemployed journalists out there to pick up."

"...we are a low-cost producer of high-quality content at scale.... we have none of the legacy costs associated with producing print publications, for example. We don’t own printing presses, or fleets of delivery trucks. We don’t have the elaborate editorial structures geared to producing products over a printing press."

The linked article further notes that AOL has hired 1,500 journalists, most as freelancers, and intends to double or triple that number in the next year. AOL has developed a stable of vertical sites, e.g., EnGadget, that most readers don't recognize as part of the parent company or brand.

Yahoo and AOL may not be able to beat Google's 21st century management style, or slug it out with Microsoft's multi-headed technology hydra, but if they can't beat the likes of the AP, the Tribune or Pinch Sulzberger's NY Times, they deserve to go under. The outcome may not be as lucrative as winning the search wars and making the market in attention, but becoming the heirs to a large chunk of the news and entertainment industries is not a bad consolation prize. (And someone with more patience than myself should line up the various strengths and weaknesses of AOL and Yahoo and see if they are natural competitors, or would be stronger together once Time Warner cuts loose the AOL assets.)

The biggest note of caution in these plans is all those aforementioned journalists. A major factor in the decline of the legacy media has been the exposure of the degree to which cant and attitude had replaced research and knowledge of their beat among reporters. Sloppy editing due to ideological bias and financial constraints has compounded the problems, which have been made glaringly obvious by the rise of citizens media. AOL and Yahoo both propose to take on large numbers of employees and stringers who have grown up in that environment. Some number of them are on the streets because they and their organizations ceased adding value; their new employers are going to have to figure out how to organize and manage them so they don't end up with similar product.

They are good reasons to think that both AOL and Yahoo might be equal to the job, for differing reasons. AOL has a deep history of organizing itself around communities of interest. Online Old Farts like myself will recall that AOL (née QuantumLink) got its start by pursuing and supporting the senior and gay and lesbian communities, among others, before it went to a horizontal consumer strategy. Those organizational genetics for getting close to virtual or physical communities may still exist. In spite of grossly wasting its community assets for years, Yahoo still has an impressive collection of virtual communities under its groups umbrella, many of which could be exploited as source, channel, or quality control on related reportage or analysis. Many of Yahoo's focal content areas - I'll mention finance in particular - correspond to vibrant blogging communities that might be brought into alignment with a true new media strategy. This will be interesting to watch.